The General Framework for Liberalization and Regulation of Public Utilities in Countries of Ex- Yugoslavia

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The General Framework for Liberalization and Regulation of Public Utilities in Countries of Ex- Yugoslavia The general framework for liberalization and regulation of public utilities in countries of ex- Yugoslavia vol. 19 I n°1 I 2017 « au service de l’analyse » — since 1998 quarterly contents Network Industries Quarterly - Vol 19 - Issue 1 (March 2017) The general framework for liberalization and regulation of public utilities in countries of ex-Yugoslavia dossier aThis edition of Network Industries Quarterly aims to provide insights into the general legal fra- 3 The Legal Regime of Utility Services and Public- mework for liberalization and regulation of public utilities, notably communal services, in countries Private Partnership in Bosnia and Herzegovina - of ex-Yugoslavia. Among ex-Yugoslav countries, two are European Union (EU) Member States Zoran Vasiljević (Slovenia and Croatia), two are in the process of accession negotiations (Montenegro, Serbia), one is a candidate country (Macedonia) and one represents a potential candidate country (Bosnia and 9 The Framework for Liberalization and Regulation Herzegovina). of Public Utilities in Croatia - Frane Staničić After World War II, ex-Yugoslavia was a unique example of self-management, and a specific system of governance and societal ownership of companies, including public utilities. In the early 1990s, 13 The General Framework for Liberalization and Yugoslav disintegration and democratization coincided with economic transformation from a socia- Regulation of Public Utilities in the Republic of list market economy to a market economy. However, legacies of the past economic system are still Macedonia - Marjan Nikolov present in some aspects, albeit in some countries more than others, and influence the process of liberalization of public utilities. This process was urged by joining the EU or is still urged by EU 17 An Overview of Public Utility Services and General accession requirements. Most of the impetus for liberalization comes as a response to low invest- Legal Framework for PPPs and Concessions in ments in infrastructure, as most of these countries have reached high debt levels and therefore a Montenegro - Budimka Golubović private finance infrastructure seems to be a solution. The market liberalization agenda began to come to the front, and regulatory reform urged creation of independent regulatory agencies for state-wide 21 General Framework for Liberalization and public utilities such as electricity and gas markets. On the other side, municipal (communal) services Regulation of Public Utilities – the case of the are mainly provided by local authorities and public operators. Liberalization agenda in many of Republic of Slovenia - Aleš Ferčić these countries presupposes privatization of public undertakings, contracting out or alternatives to privatization such as Public-Private Partnerships (PPPs) and concessions, with special attention given 26 Liberalization Agenda and the General Framework to the general legal framework for PPPs and concessions in these countries. of Serbian Local Public Utility Services Regulatory The following are some of the issues the country contributions have strived to address: Regime - Tatjana Jovanić • The scope and characteristics of public undertakings providing utilities and the character of public utilities owned or regulated by local self-government units; 32 announcements • PPPs and concessions as an “alternative” to full privatization: basic overview of active projects and reference to the legal and institutional framework for PPPs and concessions; • Liberalization agenda and the main issues in regulating local public utilities (communal services); • The character of regulatory powers and challenges posed to municipalities in regulating communal services. Network Industries Quarterly | Published four times a year, contains Although all country contributions have a similar structure, the level of detail may differ, notably information about postal, telecommunications, energy, water, transpor- tation and network industries in general. It provides original analysis, due to the existing level of development of the normative and institutional framework in a respective information and opinions on current issues. The editor establishes caps, country and different experiences in private sector involvement. After presenting the institutional headings, sub-headings, introductory abstract and inserts in articles. He also edits the articles. Opinions are the sole responsibility of the author(s). and normative setting, in the concluding remarks authors have identified the main pitfalls and pros- pects for change. Although differences exist, it seems that the volatile political situation in many Subscription | The subscription is free. Please do register at <FSR. countries of ex-Yugoslavia and the fragile political will to perform necessary reforms of public (inclu- [email protected]> to be alerted upon publication. ding local) administration and public sector of the economy are the most important deficiencies. Letters | We do publish letters from readers. Please include a full postal Therefore, it is necessary to adjust legal and regulatory frameworks and create a stable economic address and a reference to the article under discussion. The letter will be published along with the name of the author and country of residence. environment. Local administration and business communities have to understand the concept of Send your letter (maximum 450 words) to the editor-in-chief. Letters PPPs and private finance initiatives, while policymakers and local authorities must develop adequate may be edited. plans and facilitatory structures for potential PPP projects, including capacities to initiate projects Publication director | Matthias Finger Guest editor of this issue | Tatjana Jovanić and perform cost-benefit analysis for the potential projects. Managing Editor | Nadia Bert, Mohamad Razaghi, David Kupfer, Kathryn Bouchard Guest editor of this issue: Tatjana Jovanić | [email protected] Founding editor | Matthias Finger Publisher | Chair MIR, Matthias Finger, director, EPFL-CDM, Buil- ding Odyssea, Station 5, CH-1015 Lausanne, Switzerland (phone: +41.21.693.00.02; fax: +41.21.693. 00.80; email: <[email protected]>; web- site: <http://mir.epfl.ch/> dossier The Legal Regime of Utility Services and Public-Private Partnership in Bosnia and Herzegovina Zoran Vasiljević* The author analyzes the state regulation of utilities and public-private partnerships (PPPs) in Bosnia and Herzegovina and points to the different models of implementation of the PPP, as well as practical experiences. The conclusion is that there is a need for harmonization of regulation and the reinforce- ment of the role of supervisory authority. General remarks each of the cantons of the FBiH have their own laws on public utilities and PPP, which are at different levels of Bosnia and Herzegovina (BiH) is a complex country alignment with the EU acquis communautaire. Thus, in whose legal nature provokes different views (federa- the FBiH only Zenica-Doboj Canton has harmonized tion, confederation, etc.). It consists of two entities, the its Law on PPP3 with the European standards. Although Republic of Srpska (RS, 49% of the country) and the there are initiatives, the FBiH has not yet passed its law, Federation of BiH (FBiH, 51% of the territory of Bosnia but the Program of economic reforms of FBiH for the and Herzegovina), with Brcko District as condominium period 2016-2018 anticipated its adoption. Also, the law of both entities. Also, the FBiH is further divided into ten does not exist at the level of the overall state. However, at cantons. Each of these territorial units (entities, District the state level, there are other laws related to the matter and cantons) has its own legislation and constitutes a sepa- of PPP, for which provisions apply in the process of esta- rate legal subsystem within BiH. The whole of the public blishing partnerships, such as the Public Procurement Act4 sector is finally complemented by local government units and Concessions Act5, which also exist at other levels of (cities and municipalities) and public enterprises. legislative power. BiH, like other candidate countries for membership of The scope of utilities services provision and local go- the European Union (EU), has the obligation to create a vernment jurisdiction three-year program of economic reforms1. End of January 2016, the Program of Economic Reforms (ERP BiH Utility services as activities of general interest in BiH fall 2016-2018) has been adopted at the state level. In addi- within the jurisdiction of local governments6, which are tion to the macroeconomic data, it contains the overall regulated by the constitutions of the entities (eg., art. 5 program of structural reforms to improve the growth and of the Constitution of RS), and on the basis of them, the competitiveness of the country. BiH as a country of about laws on local government7. Only Brcko District, which 3.8 million inhabitants had a GDP in 2015 of about 29 operates as a unit of local government, is stated in the billion BAM. Total public spending is about 41% of GDP Constitution of BiH (art. 6/4). Independent competences (of which external debt is about 29%)2, while the unem- of the local government units, inter alia, in the area of ployment rate is between 27-28%. services include planning and providing performance of utility services: the production and supply of water, gas, Like the territorial organization of BiH, the legislation thermal energy, public transport of people in urban and relating to the issue of utilities and public-private
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